Palm Beach County Pharmacy Executive Pleads Guilty In $88M Health Care Fraud Scheme: DOJ

MIAMI, FL – A Palm Beach County pharmacy executive has pleaded guilty to his role in an $88 million scheme to defraud military health care programs, the Department of Justice said in a news release.

As part of his guilty plea, 58-year-old Matthew Smith admitted his role in fraudulently billing Tricare and CHAMPVA for expensive, medically unnecessary compound drugs from a Broward pharmacy, the DOJ said. Tricare and CHAMPVA are the health care benefit programs for the United States Department of Defense and Department of Veterans Affairs.

To further the scheme, Smith — then executive vice-president of the pharmacy — and his co-conspirators paid about $40 million in kickbacks to patients, patient recruiters and doctors in exchange for their ordering expensive pain creams, scar creams and vitamins without regard to the beneficiaries’ actual medical needs, the DOJ said.

The drugs were formulated to maximize profit without legitimate therapeutic value. The reimbursement rates sometimes reached $15,000 for a one-month supply.

Additionally, the pharmacy didn’t charge beneficiaries the mandatory copayments, something that the co-conspirators concealed, the DOJ said. The fraudulent billings caused a loss to the programs of approximately $88 million.

Smith pled guilty to one count of conspiring to commit health care fraud. He faces up to 10 years in federal prison at his sentencing, which is scheduled for April 5.

“Fraudsters steal exorbitant amounts of money from our government health programs through prescription medication fraud schemes,” U.S. Attorney Juan Antonio Gonzalez said. “Those who use kickback payments and fraudulent billing activities to defraud vital public programs will be held accountable.”